By the Newstreamz editorial board
A respectable moral agent is autonomous; that is, capable of making her own rules that she will follow. A respectable moral agent also respects himself in the business arrangements he makes. After all, if someone doesn’t respect himself, no one else is going to.
Events during the last several months suggest that the City of San Marcos, guided by its city council, is neither autonomous nor self-respecting. The city too easily backs away from its own plans and is much too eager to roll over for a sucker deal that illustrates too little self regard.
The newest instance of the city’s incontinence concerns the Springtown Shopping Center, vacated in recent months after the city granted $6 million in tax abatements so Target, Bealls and JC Penny could move to the new Stone Creek Crossing near the city conference center and the outlet malls. Virtually the same councilmembers who signed away $6 million in sales tax revenues to move those stores from the center of town to the edge of town now are about to argue that the Springtown Center is blighted and must be remedied by a $5 million city incentive.
The developers at Springtown want to open an “entertainment center” including an Alamo Draft House and drinking establishments. To launch the project, they want up to $5 million in loans up front. City leaders seem quite willing to comply. After calling an emergency meeting of Economic Development San Marcos (EDSM) to consider the loan, the council placed the matter on the July 7 agenda so it can fly under the radar during a holiday weekend.
The blunders embedded in such a giveaway are almost too numerous to mention.
First, the city would be incentivizing minimum wage jobs, to say nothing of wait and bartending jobs that pay $2.13 per hour plus tips. The city’s economic development master plan, dated May 2009, says that “Economic development efforts must promote diversification and improvements in per capita income.” This city is replete with retail jobs for college students and thoroughly lacking breadwinner jobs for college graduates. The Springtown incentive is more of the same, and certainly not worth $5 million in city tax money. The city should hang onto that $5 million until someone comes along with a serious proposal to produce living wage employment.
Second, the Springtown location is prime for private development. It is curious that councilmembers now worried that the property is blighted didn’t consider that before incentivising the stores to move down the highway. The Hopkins Street and Thorpe Lane area is a gateway connecting Interstate-35, downtown and Texas State. It is not a podunk needing a shot in the arm from the government.
After moving its San Marcos Target to Stone Creek, Dayton Hudson now owns a vacant building worth $4.2 million on the city property tax rolls. The city doesn’t need to bail out Dayton Hudson. In short time, Dayton Hudson will tire of the holding costs of the property and sell. The city should allow the situation to resolve itself privately.
Third, it’s unfortunate that city policy should be bent as it is on subsidizing national and out-of-town chain businesses to set up in competition with locally owned businesses. It’s hard enough for local, indigenous businesses to survive against turn-key competitors who aren’t subsidized by the city. If we desire a community with unique local character, we don’t make it happen by subsidizing chain businesses.
Fourth, to make a related point, are we San Marcians so little endowed with self-esteem that we have to grovel for an Alamo Draft House? For a Dave and Buster’s? For a Target? It’s as if the city government believes we would somehow be validated by the gracious presence of an Alamo Draft House. Decent people who love and respect our city believe none of those entities, nor all of them combined, are worth $5 million in public funds.
Fifth, the proposal entirely wipes away the purported advantages for cities under the sort of Chapter 380 agreement being considered. Generally, the advantage of a 380 agreement is that the city receives valuable infrastructure at no up-front cost, because the developer builds the infrastructure and later receives tax abatements over time to cover those costs. But that advantage is out the window here, because the city is going to pay those up-front costs with a loan to the developer. And the city isn’t even going to really get it back. After three years of making no payments on $5 million in loans, the developer would repay the city $250,000 per year for 20 years. So, after 23 years, the city would only have $5 million, which would be worth about $2.5 million in today’s dollars by then.
Sixth, the proposal works at crossed purposes with the city’s downtown master plan, an official policy planning document. Though the downtown master plan nowhere states specifically that downtown should be “the” entertainment district, the plan is also quite certain that the city should direct its efforts downtown.
For example (from page 26 of the plan), “The ease of process in developing along IH-35 competes with the difficulty of developing in a less-utilized Downtown. The City will need to take an active role in directing some of this development into the Downtown if it is to realize its vision for a revitalized center. The future vibrancy of the Downtown may also be threatened by the perception that Downtown is no longer a viable place for businesses whether they be office, service, or entertainment-based. Some members of the business community question the City’s commitment to recruiting new businesses to San Marcos and especially to the Downtown, and see this as one of the biggest threats to the realization of a revitalized Downtown.”
The downtown master plan is dated July 2008. The Springtown incentive is exactly the kind of threat the business community had in mind. Then there’s this, from page 48, discussing downtown: “San Marcos should encourage the establishment of ‘third places’ distinct from home and work, such as coffee shops, internet cafes, alfresco dining areas, pubs, bookstores, and the like, that foster a culture of informal gathering, socializing, conversing and exchanging ideas. The best third places are adjacent to sidewalks and public spaces; each benefits greatly through association with the other.”
And this, from page 62: “(T)he City should promote the local, specialty retail, restaurant, and entertainment businesses, and encourage the establishment or more ‘third places’ businesses Downtown.”
Business owners, taking the downtown master plan as a commitment from the city, have followed suit by taking risks downtown. Should they feel betrayed? Or should we merely call them fools for believing the city actually intended to support its downtown master plan?
If private investors want to pick out a location outside downtown for an entertainment district, they’re certainly free to do so. But should the city, in essence, partner financially with such interests, knowing they might weaken the downtown square after city policy has documented a commitment to downtown? The city should not be involved in creating that problem by incentivising it.
The city council is seriously considering a $5 million incentive to a developer who would seriously compromise the city’s ability to create a downtown environment visualized by official plans. The council is considering a government subsidized entertainment center where the location, alone, is plenty good enough to stimulate private investment. The city council is seriously considering another subsidy for minimum wage jobs in a town that desperately needs to incentivise for real jobs. Furthermore, the agreement would sign away the advantage of making a Chapter 380 agreement in the first place, all just to prove that we will wag our tail for the lowest hanging fruits of economic development to the disadvantage of local business owners.
This proposal makes the city look bad, and it’s bad policy. When the city council convenes on July 7, it should run, not walk, from this sucker deal.Email | Print